Detroit – ford motor said on Monday that it would collaborate with a Chinese supplier on a new $3.5 billion battery plant for electric vehicles in Michigan, despite the stress between America and China.
The anticipated announcement of the deal between Ford and Contemporary Amperex Technology Co., or CATL, came after Virginia Gov. Glenn Youngkin said he was take back state From a competitive process to attract the planned Ford plant to its connection to the Chinese company.
Lisa Drake, Ford’s vice president of EV industrialization, said the automaker would own the new facility through a wholly owned subsidiary rather than operate it as a joint venture with CATL, which many automakers, including Ford, have called non-China done with partners. US Xi said the company will license the technology from CATL, which will be a strategic partner.
“LFP technology is already in the US, it’s in a lot of consumer electronics devices, it’s actually in another OEM product, but unfortunately, it’s always imported,” Drake said during a media call. “The purpose of this project is to really mitigate risk by building the capability and capacity to scale this technology in the United States, where Ford has control.”
The plant is expected to open in 2026 and employ approximately 2,500 people, according to the Detroit automaker. It will produce new lithium iron phosphate batteries, or LFPs, as opposed to the nickel cobalt manganese batteries the company is currently using. The new batteries are expected to offer distinct benefits at a lower cost, helping Ford increase EV production and profit margins.
Ford follows the EV leader Tesla Using LFP batteries in a portion of their vehicles to reduce the amount of cobalt needed to make battery cells and high-voltage battery packs.
Drake said Ford isn’t necessarily concerned about the Chinese government interfering with the deal, adding that the companies “certainly thought it through and those provisions” are including optionality in the contract.
Ford’s ownership instead of a joint venture could help it avoid additional political criticism and potentially qualify for federal EV tax credits.
Marin Gazza, chief customer officer for Ford’s EV unit, said that once production resumes at the Michigan plant, about half of the vehicles are expected to be eligible. Federal tax incentives of up to $7,500 For consumers buying EV. They are expected to meet local production requirements, but not material sourcing regulations for batteries, he said.
In August, President Joe Biden Put signature on $430 billion Inflation Reduction Act, That included a stricter consumer tax credit of up to $7,500 for EV purchases, as well as substantial incentives for companies to produce batteries domestically, to wean the US auto industry from reliance on China for batteries.
Ford said it expects production of the battery cells to qualify for federal incentives of $35 per kilowatt hour and $10 per module. The plant is expected to be capable of producing 35 gigawatt hours (GWh) of LFP battery capacity.
Prior to the IRA, Ford said it would partner with CATL to locate mounting battery packs for the electric Mustang Mach-E crossover this year in North America. Drake said this was part of Ford’s plan to install 40 GWh of battery capacity, capable of powering 400,000 Ford EVs.
The new LFP plant is in addition to Ford’s collaborations with LG Energy Solutions and South Korea-based SK, including a joint venture for twin lithium-ion battery plants in Tennessee and Kentucky. Those plants are expected to come online in 2025 and 2026.
Ford plans to deliver an annual run rate of 600,000 electric vehicles globally by the end of this year and an annual run rate of 2 million globally by the end of 2026. The company aims to achieve a 8% adjusted profit margin on its EV business Until then.
The automaker said it expects to begin offering the LFP battery in the Mustang Mach-E later this year, followed by the F-150 Lightning pickup next year. The company said it will source those batteries from CATL.
With this $3.5 billion investment, Ford says it and its battery partners have announced $17.6 billion in electric vehicle and battery production investments in the United States since 2019. Those investments are expected to create more than 18,000 direct jobs and more than 100,000 indirect jobs in Michigan, Kentucky, Tennessee, Ohio and Missouri over the next three years, Ford said, citing an “independent 2020 study.”
— CNBC’s Lora Kolodny contributed to this report.